TechSpot

Xbox keeps losing money

By Julio Franco
Feb 3, 2003
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  1. Microsoft nearly doubled its losses from the Xbox video game console in the December quarter, according to a filing with the Securities and Exchange Commission.
    Meanwhile, the unit that makes Microsoft's Office software closed in on Windows as being the company's most profitable.

    Microsoft's Home and Entertainment segment, which includes the Xbox, PC games and the company's TV products, posted an operating loss of $348 million in the quarter on revenue of $1.28 billion. A year earlier it had a loss of $180 million on revenue of $833 million.

    The company loses money on each Xbox it sells, with some analysts pegging the shortfall at more than $100 per $199 console, meaning that strong sales for the platform actually increase its losses.
     
  2. poertner_1274

    poertner_1274 secroF laicepS topShceT Posts: 4,745

    I watched something about this on TechTV the other day. One of the main reasons they are doing this is to stay in the market for the "next generation" models. If they drop out now, then they will have a hard time getting customers when the next xBox comes out. It was an interesting interview actually.

    Sometimes I don't understand why M$ continues to lose money on it, but I guess when you are making BILLIONS of dollars, it is okay to lose a few million......:confused:
     
  3. Julio Franco

    Julio Franco TechSpot Editor Topic Starter Posts: 6,540   +320

    I agree, poertner. It's obvious they knew it wasn't going to be easy to get into the console market having Sony consolidated and strongest as ever, and even the experienced Nintendo left as the #2 and only rival after Sega and most others left the global market.

    Microsoft isn't doing that bad IMO, I know a lot of people that are considering x-box, and if there ever was a company that could afford the first few years of sacrifice, it's definitely multi-billionaire MS.
     
  4. iss

    iss TechSpot Chancellor Posts: 2,896

    for some years now console makers have been operating under a business model that has them selling the consoles at below cost and then recouping their loss from game sales & licensing.

    M$ of course is taking the biggesst loss on their console since they include a 20 GB harddrive in their console. the legal battle between M$ and nvidia recently was over M$ insisting that nvidia share in the loss and provide M$ with the graphics chip at below Nvidia's cost to make them. ( previously Nvidia was making a very small profit.) this is one reason you are likely to see ATI graphics int he next generation X box.
     
  5. Rick

    Rick TechSpot Staff Posts: 6,304   +52 Staff Member

    I guess this sets up MS for the future.. Now that they have established the "Microsoft" name isn't a joke in consoles, they might have better luck at designing a next gen console.
     
  6. ---agissi---

    ---agissi--- TechSpot Paladin Posts: 2,384   +15

    just a quick question....whats IMO or IMHO mean? Never really found out =/

    BTW, I think M$ should drop now, consoles just isnt their thing :p Playstation will (one day) rule the world, MUHAHHAHA (even though I about never play my PS2 :( Its great n' all, but its this PC affair you see...so damn addictive! Still - :blush:
     
  7. Vehementi

    Vehementi TechSpot Paladin Posts: 3,199

    In My Opinion and In My Humble Opinion.

    I'm surprised at MS's success in the console biz. I thought their name would be a joke - but they came out with a product that's so excellent the only thing lacking is experience and a good fan base.
     
  8. warr

    warr TS Rookie Posts: 67

    Isn't this deserved? :p

    their XBox is about what? a Pentium CPU, a Geforce chip, a DVD Rom, a motherboard, etc..

    :haha: :haha:

    if you ever know what MS really has, that is Marketing. their stuff is nothing new. *(new to *****s only)
     
  9. Julio Franco

    Julio Franco TechSpot Editor Topic Starter Posts: 6,540   +320

    The hardware has no relation with plain sales figures, perhaps if they would have invested in research for a more integrated model, maybe the console itself would be cheaper to produce.

    The x-box is a PC using a gaming OS, indeed, it's also the most powerful/capable console (hardware-wise) available.
     
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